AMD Shares Surge Nearly 7% as Analysts Predict Strong AI Growth and a Narrowing Gap with NVIDIA

Chipmaker AMD saw its shares surge nearly 7% following a strong endorsement from investment research firm CFRA, which upgraded its rating to Strong Buy and raised the stock price target from $125 to $165. The momentum comes shortly after a similar upgrade from Melius Research, which lifted its AMD price target to $175 from $110 and changed its rating from Hold to Buy.

Both firms cite AMD’s growing position in the AI GPU market as a key driver of potential growth in the coming year, suggesting that the company could close the performance and market share gap with current leader NVIDIA by 2026.

AMD’s Rise Fueled by Confidence in AI Expansion and Strategic Moves

CFRA analyst Angelo Zino outlined a bullish perspective rooted in AMD's next-gen MI400x AI accelerator, expected to gain strong traction in inferencing workloads particularly with nation-states and hyperscalers demanding more efficient and cost-effective AI compute power. The firm also highlighted AMD’s strategic acquisition of ZT Systems earlier this year, a move that positions AMD to offer full server rack solutions and gain new enterprise customers, including industry giants like Oracle and OpenAI.

ZT Systems’ hardware design and system integration capabilities will allow AMD to deliver more end-to-end AI infrastructure, directly addressing hyperscaler needs and giving it a broader competitive scope. This deeper control of the AI supply chain is seen as pivotal for AMD's 2026 ambitions.

Sovereign AI, China Reentry, and GPU Server Recovery Add to AMD’s Tailwinds

Both CFRA and Melius Research agree that sovereign AI demand—the demand for sovereign, country-owned AI infrastructure—and a potential reentry into the Chinese market could also serve as meaningful revenue drivers. Moreover, a broader recovery in the GPU server market is forecasted for 2026, positioning AMD favorably with its developing product lineup.

While NVIDIA continues to dominate the AI GPU market, the firms believe AMD is reaching a turning point that could significantly shift the landscape, especially if its MI400x chips meet performance expectations and are adopted at scale.

Year-to-date, AMD's shares are up 14%, but until this recent boost, they were trailing with a -3.7% performance due to headwinds from the slowing PC market and concerns over limited AI GPU traction. With this week’s momentum, AMD closed trading up by 6.8%, buoyed by renewed optimism.

Do you think AMD can realistically compete with NVIDIA in AI GPUs by 2026? Or is the gap too wide to close? Let us know your thoughts in the comments.